The tale of two Upper East Sides

By Melissa Dehncke-McGill | December 11, 2007 09:15AM

As the uber-wealthy continue to jockey for apartments worth tens of
millions of dollars on the Upper East Side, not everyone in the
notoriously tony neighborhood is faring as well.

While the highest-end properties are in strong demand, brokers interviewed for The Real Deal’s
monthly Q & A also noted that lower- end co-ops are lagging some,
mid-range buyers will no longer stand for overpriced apartments, and,
in some case, sellers have lowered their price expectations.

While singling out the far East Side as the hardest-hit part of the
Upper East Side market, overall lack of inventory in the neighborhood
is helping some to keep prices up.

The supply of new condos coming on the market is not as high as some
Downtown neighborhoods, for instance. Asher Alcobi, president and
founder of Peter Ashe Real Estate, noted that the approximately 1,200
new development units coming on the market in the next year or so on
the Upper East Side, or 100 a month, will be quickly scooped up.
Kathryn Steinberg, a broker at Edward Lee Cave Inc., pointed out that
while the Upper East Side has not been seriously affected by the
subprime crisis, an over-abundant supply of homes on the market– new
development or resales — could change that.

Many of those interviewed cited the Brompton and the Lucida, two luxury
condo buildings under construction on fast-changing 85th Street, as the
most exciting condo projects in the pipeline. Some mentioned Gracie
Square and East End Avenue as the most underrated spots on the Upper
East Side. As far as what’s overrated in the neighborhood, Carnegie
Hill was mentioned as no longer the place to look for a “steal,” and
others bemoaned the “small spaces and high prices” to be found on East
57th Street.

How far will your dollar go on the Upper East? Our experts say it’ll go
further there than in trendy neighborhoods like Soho and Tribeca.
Here’s more on what they had to say:

Asher Alcobi founder and president, Peter Ashe Real Estate

What part of the residential market is faring best on the Upper East Side?

New construction condos and upper-end properties, which includes
townhouses and very expensive apartments with more than 2,000 square
feet.

What part is faring worst?

The low-end co-ops are a little lagging.

What surprises you most about the Upper East Side market right now?

The upper end hasn’t been affected by the subprime crisis or the
changes on Wall Street. The biggest example is the condo conversion of
the Mark Hotel on 77th and Madison. In the midst of the chaos, they
announced that they are entering into a contract to sell a
30,000-square-foot apartment for $150 million. [The New York Post,
which first reported the deal, later reported that the price was $125
million; the potential buyer denied the deal was happening, according
to the New York Observer.]

How many different market segments are there on the Upper East Side?

There are several: co-ops, condo resales, townhouses, rentals and new
developments. And each segment is divided into three: high, mid and
low. In new development, however, it’s only the high-end or maybe
mid-range. Same for townhouses.

What is the most exciting new condo project on the Upper East Side that you’re not involved in?

The Brompton, at 85th Street and Third Avenue. It is a very traditional
building built by the Related Companies and architect Robert A.M. Stern
with all the modern amenities. I think they are 65 percent sold a year
from opening.

Is there too much new condo inventory coming to the Upper East Side?

No. If anything, it’s too little. There are around 1,200 units coming
in the next year that will mature in 12 to 16 months. That comes out to
about 100 units per month, and considering the absorption, that isn’t
much.

What is the most underrated part of the Upper East Side?

Spanish Harlem — from 97th to 125th streets. That’s the only way the Upper East Side can extend.

Kathryn Steinberg broker, Edward Lee Cave Inc.

What part of the residential market is faring best on the Upper East Side right now?

The market has held, but there is an absence of property. With very
little to buy, I don’t see any part of the market that has been
affected. If the supply balance shifts, then the subprime crunch may
become a factor. There certainly is no frenzy, as there was before, and
the flawed apartments take a while to sell, but if things are priced
right, they are selling.

What surprises you most about the Upper East Side market right now?

The fact that it is easier in the $2 to $3 million range to get an
apartment that is larger than [in] other neighborhoods like Tribeca,
Chelsea and Flatiron.

What is the most exciting new condo project on the Upper East Side?

The Lucida [at Lexington and 85th Street] is doing really well, more
than maybe that corner and specific neighborhood warrants. It’s a very
convenient area, but also congested, crowded and noisy.

Cindy Kurtin senior vice president, Stribling & Associates

What part of the residential market is faring best on the Upper East Side?

The luxury family-sized home with three to four bedrooms plus a library.

What part is faring worst?

Any properties that need a lot of work. People are sensitive about going into something with a lot of unknowns.

What is the most exciting new condo project on the Upper East Side?

[The converted Stanhope Hotel at] 995 Fifth Avenue, the Brompton and
the Lucida. But ultimately, it’s 995 Fifth Avenue because of the views,
the fact that it’s on Fifth Avenue [at 81st Street], the custom
finishes and the old-world elegance.

“Cool” isn’t a word one normally associates with the Upper East Side, but where is the coolest area of the neighborhood?

Young buyers love Third Avenue from the 60s to the 80s. They are
getting much better value there than in the West Village or Tribeca.

Laurance Kaiser IV president, Key-Ventures Inc.

What group of buyers is the most active on the Upper East Side?

The top, top, top, because there’s no product.

What group of sellers is most active?

The middle of the market.

How many different market segments or submarkets are there on the Upper East Side?

Maybe five: the upper condo; the lower condo; the top, top, top co-op market; the medium co-op; and the rental.

What is the most exciting new condo project on the Upper East?

Anything from the west side of Lexington is landmarked, so they can’t
build anything new. It has to be 170 East End Avenue, the Peter
Marino-designed building. Other than that, on Fifth, Madison, Park and
Lexington, there is nothing.

What is the most underrated part of the Upper East Side right now?

Gracie Square and East End Avenue. One East End, 120 East End, the new
Marino building at 170 East End, and 1, 7 and 10 Gracie Square — the
apartments are grand, quiet and beautiful.

Where is the best bargain?

10 Gracie Square, a huge apartment in a top building [is on the
market]. If The Same Apartment Was On Fifth Avenue, the price would be
five times as high.

Bonnie Brown broker, Coldwell Banker Hunt Kennedy

What part of the Upper East Side market is faring worst?

Too far east. And I’m finding that buyers are not willing to do light
cosmetic renovation. They don’t want to go for the expense or the time
constraints and dealing with board restrictions.

What is the most exciting new condo project on the Upper East Side?

The Brompton On 85th Street is going to be great.

What area is the most overrated?

I don’t know if it would be considered overrated, but in Carnegie Hill
and close to Fifth Avenue, you are not going to find your steal. It’s
still considered prime, especially for families.

Dianne Van Laer senior vice president, Bellmarc Realty

What parts of the Upper East Side market are faring best and what parts are faring worst?

The high end of the residential market is best. The further east you
go, there are the one-bedroom boxes with cookie-cutter floor plans that
are affected most by the credit crunch. Those buyers are wondering how
much bonuses will be cut.

What surprises you most about the Upper East Side?

There are a lot of foreign buyers. I am placing a foreign buyer in a
prestigious Property On Fifth Avenue. Since the dollar is so low
compared to the euro, foreign buyers are willing to go through the
torture of a co-op board, because it’s so cheap. The dollar is
historically low.

What is the most underrated area on the Upper East Side?

Around 85th Street Is The Next Place where prices are really going to
appreciate. Also, the East End Avenue area can get great values. Once
the Second Avenue subway is built, it will appeal to more people. It’s
probably one of the last places in the city where you can get a parking
spot for $200 a month.

What sort of per-square-foot prices are you seeing on Third Avenue and to the east?

I would probably say the good news is that things are a little bit more
negotiable. Sellers are a little more wary and do not have quite as
high expectations.

What is the most overrated part of the Upper East Side?

East 57th Street. It has small spaces and high prices. It’s like living in Times Square.

Pamela Barnes-Moses senior managing director, Corcoran

What part of the Upper East Side market is faring worst?

The market seems to be quiet for post-war one-bedrooms. If priced high, buyers are not even wasting their time.

What group of buyers is most active?

The investor market [foreign buyers] are the most active and will only
get more active. Right now, the number of foreign investors is
incredible.

How is the Upper East Side faring in relation to other parts of Manhattan?

The Upper East Side is steady eddy. Neighborhoods like Soho command
much more price per square foot. But the Upper East Side has a very
dedicated community.